FG Launches N729bn Power Bond to Clear Debts, Boost Nigeria’s Electricity Sector

The Federal Government has launched a N729 billion Series 2 Power Sector Bond as part of efforts to resolve verified legacy debts in Nigeria’s electricity market, improve liquidity across the power value chain and unlock fresh long-term investment in the sector.

The bond issuance is being implemented under the Presidential Power Sector Debt Reduction Programme, a government initiative aimed at addressing accumulated financial obligations that have weakened the operations of key players in the Nigerian Electricity Supply Industry (NESI).

The Minister of Finance and Coordinating Minister of the Economy, Taiwo Oyedele, disclosed the development on Tuesday at an investor forum organised in Abuja to discuss the latest bond issuance.

According to a statement issued by Maryann Duke, Senior Special Assistant on Communications and Press Secretary to the minister, Oyedele described the transaction as a major step in the Federal Government's efforts to strengthen the financial foundations of the electricity industry and restore confidence among investors and market participants.

The minister said the programme was designed to resolve verified legacy liabilities while creating a more stable financial environment for electricity generation and supply.

He said the initiative demonstrated the government's determination to meet its financial obligations through transparent and market-based reforms capable of improving liquidity across the electricity value chain.

Oyedele pointed to the successful implementation of the first phase of the programme, saying the maiden N501 billion Series 1 Power Sector Bond was fully subscribed by investors.

He added that the first bond had already recorded its first scheduled repayment, describing the development as evidence that the government was building credibility by honouring its financial commitments.

“The first series proved that government keeps its commitments. Investors reward execution, not promises, and every commitment honoured today lowers the cost of capital tomorrow,” he said.

The minister said the N729 billion Series 2 bond would be used to settle verified obligations owed to additional power generation companies (GenCos), gas suppliers and service providers within the electricity value chain.

The government expects the settlement of the outstanding liabilities to improve the financial position of the sector, support greater gas availability for power generation and encourage GenCos to increase plant availability.

The move is also expected to strengthen market liquidity and improve operational stability across the electricity industry.

For a sector that has struggled with a cycle of unpaid invoices, gas supply challenges, inadequate generation and weak liquidity, the government believes addressing legacy debts is essential to creating conditions for sustained investment.

The latest bond issuance comes as the Federal Government continues to address outstanding liabilities owed to power sector operators.

At the investor forum on Tuesday, Olu Verheijen, Special Adviser to President Bola Tinubu on Energy, disclosed that the government had already settled N333 billion in legacy debt owed to eight GenCos.

The figure represents a separate payment under the government's broader efforts to clear verified historical obligations in the sector.

The government is now seeking to use the Series 2 bond to address additional verified liabilities to other beneficiaries across the electricity supply chain.

The objective, according to officials, is to break the cycle of debt accumulation that has constrained the ability of power producers and other critical players to operate effectively.

Oyedele said dependable electricity remained essential to Nigeria's economic transformation, industrialisation and job creation.

He argued that no country could achieve sustained economic development without reliable power infrastructure capable of supporting businesses, industries and households.

The minister said the government's efforts to resolve power sector debts should therefore be viewed as part of a broader economic strategy rather than simply a financial intervention.

According to him, the bond programme is intended to improve the conditions necessary for increased private-sector participation and long-term investment in the electricity market.

He said the government was committed to reforms that would make the power sector more attractive to investors while strengthening the institutions and financial structures required to support sustainable growth.

Speaking at the forum, Oyedele also highlighted what he described as the broader macroeconomic reforms implemented by the administration of President Bola Ahmed Tinubu.

The minister said the government's policies were aimed at strengthening fiscal sustainability, improving the investment climate and restoring macroeconomic stability.

He cited Nigeria's reported 3.9 per cent economic growth in the first quarter of 2026 as well as 11.2 per cent growth in US dollar terms in 2025, as indicators of improving economic conditions and investor confidence.

Oyedele said the government's reform programme was creating a foundation for stronger private-sector participation and long-term investment.

He stressed, however, that the scale of Nigeria's infrastructure needs meant government funding alone would not be sufficient to finance the country's development ambitions.

The finance minister said Nigeria must increasingly mobilise private capital to finance infrastructure and other strategic sectors of the economy.

He called on institutional investors to continue partnering with the government through credible financial institutions, sound policy frameworks and innovative financing mechanisms.

According to Oyedele, investments in the power sector bond should not be viewed solely as financing for electricity infrastructure.

Rather, he said, they represent investments in productivity, industrial competitiveness, job creation and shared prosperity.

The government believes that resolving the debt crisis within the electricity market will help improve confidence among investors and encourage additional capital into power generation, gas supply and other areas of the value chain.

As the Series 2 bond programme progresses, the key test will be whether the settlement of verified debts translates into measurable improvements in gas availability, generation capacity, electricity supply and the overall financial health of the Nigerian Electricity Supply Industry.

For the Federal Government, the latest intervention is part of a broader attempt to address the structural financial challenges that have continued to undermine Nigeria's power sector and limit its contribution to economic growth.